What is Repo Rate, Reverse Repo Rate ?

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A repo or repurchase Agreement is an instrument of money market. Usually reserve bank (federal bank in U.S) and commercial banks involve in repo transactions but not restricted to these two. Individuals, banks, financial institutes can also participate in repurchase agreement.

Repo is a collateralized lending i.e. the banks which borrow money from Reserve Bank to meet short term needs have to sell securities, usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. In this way for the lender of the cash (usually Reserve Bank) the securities sold by the borrower are the collateral against default risk and for the borrower of cash (usually commercial banks) cash received from the lender is the collateral.

Reserve bank charges some interest rate on the cash borrowed by banks. This rate is usually less than the interest rate on bonds as the borrowing is collateral. This interest rate is called ‘repo rate’. The lender of securities is said to be doing repo whereas the lender of cash is said to be doing ‘reverse repo’.

In a reverse repo Reserve Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate.

Borrower of funds is called as seller of repo and lender of funds is called as buyer of repo. When the term of the loan is for one day it is known as an overnight repo and if it is for more than one day it is called a term repo.

The forward clean price of bonds is set at a level which is different from the spot clean price by adjusting the difference between repo rate and coupon earned on the security.

Current Reference Rates:

Repo Rate : 7.50%

Reverse Repo Rate: 8.50%

Bank Rate: 9.50%

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{ 140 comments… read them below or add one }

sandeep January 16, 2011 at 3:47 pm

please tell me a repo rate, s.l.r, bank rate

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Sathish Emmadi January 16, 2011 at 4:16 pm

Hi Sandeep,

Now the bank rate is 6%, Repo rate is 6.25%, Reverse Repo rate is 5.25% and SLR is 24%, CRR is 6%

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RICKY SETH June 30, 2011 at 8:19 am

repo rate is a rate at which commerial banks borrow money from rbi to fulfil short term goals called repo rate.

bank rate is a rate at which central bank ready to give money to commercial banks.

slr not sure what is?

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kanchan February 11, 2011 at 2:40 pm

i want to knew about repo rate reverse repo rate slr crr and plr………plz tell me about all these …and i m so confuse about money inflection, and deflation ….

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manish bansal March 2, 2011 at 10:19 am

Hi this is manish. i want to know that what is means of Repo Rate and what is reverse Repo Rate and what is CRR and what is the means of bank rate and means of CRR

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Pankaj Priyadarshi March 2, 2011 at 6:21 pm

Kanchan, Manish
Repo rate is rate at which banks borrow from RBI. Reverse repo is rate at which RBI borrows from banks.
These rates impact the liquidity in the system.

CRR is cash reserve ratio. This is the cash that is kept in RBI by different banks. For example, out of Rs 100 deposit in any bank, Rs 9 should be kept at RBI (if the CRR is 9%).

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Ankur Singh Chauhan March 11, 2011 at 5:42 am

What is CRR (For Non Bankers) :
CRR means Cash Reserve Ratio. Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks don’t hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivlanet to holding cash with themselves.. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, When a bank’s deposits increase by Rs100, and if the cash reserve ratio is 9%, the banks will have to hold additional Rs 9 with RBI and Bank will be able to use only Rs 91 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR, makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system.

What is SLR ? (For Non Bankers) :
SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved to liabilities (deposits) It regulates the credit growth in India.

What are Repo rate and Reverse Repo rate?

Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate

Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The RBI uses this tool when it feels there is too much money floating in the banking system. An increase in the reverse repo rate means that the RBI will borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep their money with the RBI.

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K.Bala March 15, 2011 at 2:24 pm

Good explaination Ankur Singh. You left bank rate. Explain that too will do great. Thanks

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Vibha March 22, 2011 at 11:58 am

@ K.Bala.. Bank Rate is interest rate @ which Central Bank (In India RBI) lends Loans and Advances to commercial banks or FI’s for long term basis .Bank rate is also known as “Discount Rate”
and it is differ from Repo Rate cause Repo Rate is for short term loans by RBI to banks.

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Gaurav October 5, 2011 at 4:18 am

Very Good Explanation Ankur..Thanks !

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biswajyoti sarmah September 23, 2012 at 7:35 am

nice explanation easy to understand..

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pavithra March 18, 2011 at 5:20 am

hi this is pavithra, i would like to know about the credit control facilities of RBI. please help me knowing that!

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FATIMA HUSSAIN March 18, 2011 at 6:24 am

sir now the RBI has hiked its repo rate &reverse repo rate. What would be its immediate effect?

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sumit May 2, 2011 at 9:48 am

Sir,
Are you tell me in deatils about SLR and CRR.

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Fenil May 3, 2011 at 11:34 am

Hi,..It’s fenil here..I dont understand that …y RBI will borrow money from banks ?

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jiten July 27, 2011 at 6:47 am

To maintain liquidity in the market. To maintain value of Rupee at a reasonable level.

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D.CH.APPARAO May 3, 2011 at 6:10 pm

what is repo

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Swati Gawde May 7, 2011 at 5:47 am

repo means repurchase. when banks need money they borrow from from RBI and pay some rate of interest to RBI. They borrow from RBI for their short term needs.

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kuldeep June 25, 2011 at 4:46 am

sir,
plz tell me about SDR and CAR.Spiceal drawing rate and capital adiquacy retio.

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Sathish Emmadi June 25, 2011 at 12:03 pm

Hi Kuldeep,

I will cover CAR. SDR is not related to RBI or any Central bank though.

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amrit pal singh May 8, 2011 at 2:15 pm

How much currency a country can print or havr?

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Sathish Emmadi May 8, 2011 at 3:46 pm

Hi Fenil,

Reverse repo is basically to absorb liquidity in the market rather than RBI’s funds requirement. RBI pays interest on the excess short term money (very short term in fact) parked by banks. Hope it clarifies!

Please note that this money parked at RBI by banks is different from CRR requirement. CRR is must for banks whereas reverse repo is voluntary.

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Sathish Emmadi May 8, 2011 at 3:58 pm

Hi Amrit,

As far as my knowledge goes, there is no restriction. Central bank has freedom to print currency. But it prints only in the required amounts. Excess printing will cause loss of value of currency as we have seen hyper-inflation in Zimbabwe in recent times.

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JAI KISHAN October 14, 2011 at 6:54 pm

Hello
Sir, plz tell me abt SLR if can possible plz tell in easy language

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Srinivas August 1, 2012 at 1:36 pm

financial institution (BANKS) must maintain as reserves other than the cash. liquid assets EX: GOLD

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amit patel May 16, 2011 at 7:11 pm

sir, what is stagflation…?

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Srinivas August 1, 2012 at 1:33 pm

stagflation is a situation in which the inflation rate is high,
the economic growth rate slows down,
and unemployment remains steadily high

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vikas kharb May 17, 2011 at 5:30 am

sir plz explain repo rate and reverse repo rate? and current rate is going on…….

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Vishwa P Mishra May 17, 2011 at 10:52 am

Sir, I understand that the new monetary policies( ie increased repo & reverse repo rates) are going to trap the Growth, as they have. But I am not able to follow when Mr. Finance Minister says it will curb the Inflation. Could you please explain the know-how. Thank You!

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Sathish Emmadi May 17, 2011 at 5:30 pm

Hi Vikas,

Current rates are as below.

Repo rate: 7.25%
Reverse repo rate is: 6.25%

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Sathish Emmadi May 17, 2011 at 5:37 pm

Hi Vishwa,

Increasing policy rates is the traditional way of controlling liquidity in the market. When RBI increases base rates, banks increase their interest rates both deposit as well as loans. As a result, there will be less people who take loans and investors are encouraged to deposit their money in banks rather than spending. When there is less spending there will be less inflation.

Regarding growth: When the interest are high, a company which takes loans for a business has to pay more amount of interest, so profits will come down. So there is a less probability of expanding businesses. so less growth rate.

Hope it is clear.

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Vishwa P Mishra June 3, 2011 at 6:16 am

Clean!! thank you Sathish..

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Inder May 21, 2011 at 2:17 pm

Will you please let me know the defination of SHARPE RATIO with some examples

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Sathish Emmadi May 21, 2011 at 2:22 pm

Hi Inder,

Sharpe ratio is used to measure a mutual fund manager’s ability in generating profits considering the risk he has taken. I will cover it in a separate post.

A higher Sharpe ratio is preferable as it denotes higher returns for the risk taken. A negative Sharpe ratio indicates that the fund is performing worse than a riskless asset.

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Dheeraj May 23, 2011 at 7:55 am

Hi,

Is there any alternative to control inflation other than increasing interest rates?

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Sathish Emmadi May 23, 2011 at 5:24 pm

Next in the list are, Government’s fiscal policy. For example, if government offers more tax benefits on investments, people will invest more than spending.

Currency ex-rates too play a role. For example, In an European country if the bank rates are very less, say 3%. Instead of keeping their money in their country’s banks, they will try to invest in India. This appreciates rupee against that currency. In this case RBI’s stand makes a difference i.e. to manipulate currency market by involving in trading and depreciate rupee intentionally so that exporters won’t be affected adversely or allow the appreciation of rupee.

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Aniket May 27, 2011 at 1:26 pm

i would like to know the effect of increase in repo & reverse repo rate & CRR & SLR on the economy & inflation

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Sathish Emmadi May 27, 2011 at 1:38 pm

Hi Aniket,

Repo and reverse repo are discussed in the articles and comments. Please visit the below articles for CRR and SLR

http://lastbull.com/what-is-cash-reserve-ratio-crr/
http://lastbull.com/what-is-statutory-liquidity-ratio-slr/

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Vishwa P Mishra June 3, 2011 at 6:26 am

Mr. Sathish,
Would you say that the RBI policy to increase Repo/reverse-Repo rates was successful in achieving its primary goal to stop further inflation(it was definitely able to stop further growth)?
Would you also agree that it was the best way to stop inflation?
Can we design a way to control inflation without affecting the Growth radical?

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Sathish Emmadi June 4, 2011 at 4:54 pm

Hi Vishwa,

Clearly it is not successful. But there should be an initiative from Government’s side too like eliminating rigging of agriculture product prices etc and take steps to increase supply wherever it is lacking.

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Pankaj Priyadarshi June 7, 2011 at 5:38 am

Vishwa
Sathish is right. The inflation is more because of the price manioulation and lack of supply.
Moreover, India is trying to reduce inflation by focusing on demand side (like raising policy rates). The issue is on the supply side. India produces enough agriculture produce but it is not reaching to the market. Lot of foodgrains rot in godown and in open.

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Balaji June 8, 2011 at 7:16 am

Hi,

I need some clarifications :
1.Does inflation has any connection with recession,if so what is it..?
2.What are the effects of printing more curreny?
3.How is dollar value related to Indian Rupee.?

Morover, i am interested in knowing about all these businnes related,markets,sensex etc..Could you please suggest a link or site where i can understand,on a beginners perspective.?

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Sathish Emmadi June 8, 2011 at 1:27 pm

Hi Balaji,

You have come to the right website. We have already posted a number of articles on many subjects of stock market for beginners. Either search with a specific key word in the search box provided at the top of the page or click on the categories listed out on the left hand side of the page and go through them.

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AKASH DUTTA June 14, 2011 at 4:10 am

hi…

i am interested in bank PO job’s will you suggest me some tips to crack test.

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Sathish Emmadi June 17, 2011 at 6:49 pm

As you know the RBI has increased key policy rates by 25 bps. The current rates are as below

Repo rate: 7.5%
Reverse Repo rate: 6.5%
Bank Rate: 6%

Reserve ratios are untouched.

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BALRAM RAYKA June 23, 2011 at 12:07 pm

sir what is the meaning of slr ,bank rate ,crr.

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Sathish Emmadi June 23, 2011 at 2:49 pm
MEENA June 24, 2011 at 1:48 pm

MR.SATISH ,
what is Repo rate ? what is reverse repo rate? and about SRR ,SLR?

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Sathish Emmadi June 24, 2011 at 2:49 pm

Hi Meena, This article and the links mentioned in the comments cover the topics, Do you have any specific query regarding the content of the article?

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ASHU KUMAR June 25, 2011 at 3:59 am

DEAR SIR,
KINDLY UPDATE ME REGARDING THE REPO RATE, RRR, PLR, BANK RATES, GDP RATE, AND ETC.
THANKS AND REGARDS
ASHU KUMAR SINGH

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SUJIT July 7, 2011 at 5:26 pm

T hanks Mr Ankur.you gave me a clear idea abou thes things.But i am little bit confused about SLR .If you will give more information about these then it will be better.this is priliminary idea plz inform related things also.

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Sathish Emmadi July 8, 2011 at 4:01 pm

Hi Sujit,

Have you read the below article on SLR?

http://lastbull.com/what-is-statutory-liquidity-ratio-slr/

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neeraj July 9, 2011 at 5:48 pm

hello sir,
please tell me what is repo rate and what is reverse repo rate in the easiest language.

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ANURAG July 11, 2011 at 9:50 am

How does RBI circulate money which it prints in INDIA?

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Prameela July 13, 2011 at 9:01 am

Hi Sathish,
I am preparing for SBI PO Exam.Please suggest some good books that I could refer to….keeping in mind that I just have 10 days to do so…

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Anusuya July 20, 2011 at 2:58 am

Why repo rate is higher than bank rate, even though lending at the cost of repo is secured loan and no collateral is needed for lending at the rate of bank rate?

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KAPIL KUMAR July 23, 2011 at 3:17 am

hi
sir new repo rate /slr/reverse repo rate /bank rate discresed /increased sent my id please.
thanks.

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Archana kumari July 23, 2011 at 8:54 am

What is current Repo rate,Reverse repo rate,SLR,CRR,bank rate.

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Sathish Emmadi July 24, 2011 at 1:05 pm

Hi Archana/Kapil,

Current Bank Rate is 6.0%, Reverse repo rate is 6.5% and reporate is 7.5%. CLR is 6% and SLR is 24%

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Sathish Emmadi July 24, 2011 at 1:16 pm

Hi Neeraj,

I feel the language used in the article is for a layman. If you haveany specific doubts, please let me know.

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Sathish Emmadi July 24, 2011 at 1:18 pm

Hi Anurag,

The simple answer is “Through Banks”.

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Sathish Emmadi July 24, 2011 at 1:20 pm

Hi Prameela,

Apologies for the delayed response. I don’t have much idea about bank exams and MBA. I am an engineering graduate by qualification. Out of my own interest, I learned financial concepts.

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Sathish Emmadi July 24, 2011 at 2:14 pm

Hi Anusuya,

It depends on RBI’s perspective of long term and short term loans. Repo rate is for a short term and bank rate is for long term loans. In a developing country, the central bank may want to keep long term rates low to encourage overall economic growth.

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rudresh arya July 25, 2011 at 4:04 pm

hi, i m a buznssman, but i don have any comercial property may i get a limit from any bank.

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Sathish Emmadi July 26, 2011 at 3:34 pm

Hi Rudresh,

I didn’t get your question. Did you mean getting a loan from a bank?

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Sathish Emmadi July 26, 2011 at 3:36 pm

Current bank rate is 6%, repo rate is 8% and reverse repo rate is 7%.
No change to CRR and SLR i.e. CRR is at 6% and SLR is at 24%.

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vinay August 1, 2011 at 10:09 am

hello Mr. sathish,
i would like to know what is the relation between SLR and CRR? Is SLR include CRR . i mean bank have to deposit some money in form of cash at RBI according to CRR and bank have to also maintain some deposit in form of gold, cash and other securities as per SLR. so the cash deposited in form of CRR includes in SLR or not.

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Sathish Emmadi August 1, 2011 at 6:23 pm

Hi Vinay,

As per my knowledge SLR doesn’t include CRR. In case of CRR the banks have to park some amount of Cash with RBI whereas in case of SLR banks have to maintain some amount of cash and cash equivalents in their own accounts to meet customer withdrawal requests. SLR also ensures banks will not give away more money in loans.

By holding cash equivalents the banks earn some amount. For example, by holding G-Secs, the banks receive interest.

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ash August 4, 2011 at 5:40 pm

for maximum how many days a bank can borrow money from rbi at repo rate?

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Sathish Emmadi August 5, 2011 at 2:46 pm

Hi Ash,

The maximum repo period is 14 days in India.

You may be interested in repo calculations.
http://lastbull.com/calculations-involved-in-repo-and-reverse-repo/

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Ramana IAS Studypoint August 10, 2011 at 3:25 am

NIce work. Also visit my blog.

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shashank verma August 12, 2011 at 9:58 am

what is current repo rate ,reverse repo rate,bank rate,CRR and SLR?

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Sathish Emmadi August 15, 2011 at 8:46 am

Hi Shashank,

The current bank rate is 6%, reverse repo rate is 7% and repo rate is 8%.
CRR is 6% and SLR is 24%

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gaurav August 22, 2011 at 4:17 am

sir
please tell me the difference between BANK RATE AND REPO

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gaurav August 22, 2011 at 4:22 am

sir,
what is current inflation rate and its change daily?

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gaurav August 22, 2011 at 4:26 am

what are the mordern way to control inflation not traditional ?
other than slr ,crr, bank rate, repo, reverse repo.

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Sathish Emmadi August 23, 2011 at 3:45 pm

Hi Gaurav,

Quantitative Easing techniques are the unconventional way of controlling economy. These days every one is talking about if Federal bank can apply QE3 to stimulate US economy.

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Sathish Emmadi August 23, 2011 at 3:52 pm

Inflation is not calculated daily. You can keep track of inflation numbers on the below site every month.

http://statisticsofindia.com/tatasoi/

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gaurav August 24, 2011 at 12:28 pm

what is m3growth 16.7 ?
and what is wpi 153?

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rajesh sharma August 31, 2011 at 11:41 am

What is repo rate and reverse repo rate and how it affects on inflation control?

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SIDDHARTH September 10, 2011 at 8:26 pm

CRR- it is also known as CASH RESERVE RATIO, it is the amount of money which the commercial banks has to keep with RBI…

SLR-it is also known as STATUTORY LIQUIDITY RATIO , it is valued in terms of liquid assets of banks which the banks has to keep with RBI.

REPO RATE-it is the rate at which RBI gives loan to commercial banks

REVERSE REPO RATE-it is the rate at which the commercial banks gives loan to RBI.

AT THE TIME OF INFLATION RBI INCREASES THE (CRR,SLR) AND THUS DECREASE THE LOAN GIVING CAPACITY OF COMMERCIAL BANKS IN ORDER TO REDUCE THE MONEY SUPPLY IN THE ECONOMY

AT THE TIME OF DEFLATION RBI DECREASES THE (CRR,SLR) AND THUS INCREASE THE LOAN GIVING CAPACITY OF COMMERCIAL BANKS IN ORDER TO INCREASE MONEY SUPPLY IN THE ECONOMY

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Archana September 16, 2011 at 2:21 pm

hello sir,
I want to know that hike in repo & reverse repo rate affects profitability of commercial banks or not ?If yes then how positively or negatively?
If negatively then what commercial banks can do to maintain profitability even after hike in rates?
If positively then how?

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kiran September 27, 2011 at 8:41 am

ciao sir,
I want numeric data about the latest monetry policy measurement & the repo rate, reverse repo rate & CRR rate of year 2007 to 2010

awaiting for your reply

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Sathish Emmadi September 29, 2011 at 4:41 pm

Hi Kiran,

Please try searching on RBI site. You may get it in the archives. The info available on any other site may not be accurate.

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Bhushan October 6, 2011 at 5:43 pm

Hi Satish,

Could you please focus whether repo rate and reverse repo rate will benefited to Co-operative Banks or it adversely affect to compete with nationalized banks.

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Kamal singh October 7, 2011 at 5:23 am

Sir
What is B.P.L.R.?

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JAYANTHI October 25, 2011 at 9:59 am

THANKS A TON TO SATHISH EMMADI:):):) GOT ALL MY STUFFS CLEARED:):):):):) HAPPY DIWALI TO ONE AND ALL:):):) NOW REPO RATE IS 8.25% AND AGAIN THE REASON BEHIND IT IS TO CURB THE INFLATION:(:( over all no growth

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philip November 15, 2011 at 10:42 pm

how does govt raise money for investments through open market operation??
Govt buys or sells securities…. Plz c

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Jignesh November 16, 2011 at 6:29 am

what is meaning of CRR/reporate/reversreporate?

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sudha November 16, 2011 at 10:13 am

sir,
my name is sudha, sir please tell me what repo rate , reverse repo rate , crr, and bank rate. please tell me sir

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vivek raj November 21, 2011 at 6:47 am

hi satish,
rbi is trying to control inflation by raising different rates. still its no where near to success. can u pls give a logical explanation for the same.

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Dhruv November 26, 2011 at 3:50 pm

Hi Vivek,

The answer to your question abit complicated, actually there alot many attributes attached to inflation frm mere rising intrest rates. Secondly we also need to remember tat its not gng to bring down inflation rates down overnight its a huge permutation and combination when all works simutaneously and as desired then it will prove the point

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Dhruv November 26, 2011 at 3:52 pm

The concepts like CRR, SLR and repo rates are a very complicated phenomena when its been overcautiously contained it may even hve a speed breaker effect to the countries GDP

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khyathi January 29, 2012 at 7:35 pm

sir,
through your article i got clear on what they are but wasnt able to answer a question i gotin college..
hope you can help me with that..
it goes like..
RBI INFACT INDULGES IN A REVERSE REPO AT THE REPO RATE ANNOUNCED BY IT..

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khyathi January 29, 2012 at 7:37 pm

SIR,
can you help me with this question-
rbii infact indulges in a reverse repo at the repo rate announced by it

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Sathish Emmadi February 6, 2012 at 10:56 am

RBI uses Reverse repo rate for reverse repos.

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VEERA SEKHAR GOWDA February 10, 2012 at 5:46 pm

when RBI gives loans to the banks only why this rbi does nt gives loans to the other companies

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Rishi Kant Tripathi February 17, 2012 at 4:56 pm

@Veera Sekhar Gowda
though RBI is a bank but it does not provide the banking services to the public, be it a company or any other financial institution or an individual. The banking facilities, like loan etc, are provided to the public only by the commercial banks. RBI lends money only to the banks when they need it.

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chandra sekhar March 23, 2012 at 2:39 am

hi satish..
how economic stagnation is related to inflation….??
an example will do good… need help

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Rishi Kant Tripathi February 17, 2012 at 4:47 pm

Hello sir, we all know that the RBI has increased the Bank Rate to 9.5% (w.e.f. 13-02-2012) after a long gap of nine years; I’ve two questions regarding this:
1: Why the Bank Rate was kept unchange for such a long period of nine years?
2: What would be the numerous effects of the increse in the Bank Rate?

I am preparing for Bank PO interview, so these questions might be asked during my interviews. I would be thankful if u suggest me the appropriate answers of thes questions.
(i belong to non-banking background)
Regards.

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Mayank February 28, 2012 at 4:39 pm

1. No particular reason, just a technical adjustment. Bank rate is hardly used in practice. it is used to penalize banks in case of CRR default, however, practically no defaults happens.
2. Impact would be higher penalty for bank (if default happens). Higher discounting will lead to fall in market value of asset/liability.

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pawan February 17, 2012 at 5:32 pm

what is arbitrage

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Mayank February 28, 2012 at 4:43 pm

if an apple is sold @ 50 rs/kg in market 1 and 60 rs/kg in market 2. there is an arbitrage opportunity of 10 rs (assuming no other cost involved). You can buy from Market 1 and sell the same in market 2 to gain 10 rs with no effort. This is arbitrage.

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raj February 18, 2012 at 7:00 am

Is TDS applicable on Bank MIS?

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Mayank February 28, 2012 at 4:47 pm

Tax benefits can be availed under section 80L on MIS (Monthly income scheme).

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mamta February 22, 2012 at 8:11 am

Hello sir,
Will you plz tell me what are the reserves does RBI is going to maintain? Difference between RRBs and commercial banks?

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Mayank February 28, 2012 at 4:48 pm

by reserve, do u mean reserve ratios like CRR & SLR?

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Jason February 29, 2012 at 6:02 am

Please check the ‘current reference rates’..

Repo rate is 8.5% and reverse repo is 7.5%

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Pramod khatana March 1, 2012 at 1:52 am

Hi Sir,
will u plz tel me the difference b’ween Normal cheque payment and Payment through NEFT

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M.Shiva Kumar March 2, 2012 at 3:37 pm

What is the difference betweem Sensex and Nifty?

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Barnali Mukherjee March 4, 2012 at 1:18 pm

the rat on which banks borrow from the RBI is called-

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Sanjeev Bansal March 13, 2012 at 2:34 am

Thanx satish for such a wonderful explanation of everything.
I have a question though
Why RBI cant come up with a policy where interest rates on only deposits is increased and for loans it is kept constant while keeping some difference between both rates so that banks can earn their profit.

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Sanjeev Bansal March 13, 2012 at 2:36 am

This way inflation will go down but growth will not be affected according to my knowledge. Also the rupee value will be inclined towards moving up

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M.ramesh March 20, 2012 at 5:37 am

My Research Topic FINANCIAL PERFORMANCE OF SCHEDULED COMMERCIAL BANKS IN INDIA. I want about the commercial banks in india data 10 years (2000-2011), i collect my data sector wise Puplic sector,Private sector (OLD & NEW) Foreign banks , Nationalised banks, SBI & Associates.

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Priya April 10, 2012 at 11:22 am

So basically, repurchase rate is the rate at which commercial banks borrow from RBI and reverse repo rate is the rate at which RBI borrows from commercial banks…
when either parties borrow, they do it by keeping g-secs as collateral…when borrowed for a day – its called an overnight repo, if borrowed for longer, its called, term repo…

great i had been wanting to understand this for quite some time..and i chanced upon your article…thanks a ton!

have you heard of ETspeed.com…. its an economic times website meant for market experts, analysts, investors – you must join in and contribute…i’m sure you’ll find a lot of followers there…there are a lot of experts of there like you :)

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jay April 11, 2012 at 12:33 pm

CRR(Cash Reserve Ratio):Cash reserve Ratio (CRR) is the amount of Cash(liquid cash like gold) that the banks have to keep with RBI. This Ratio is basically to secure solvency of the bank and to drain out the excessive money from the banks. If RBI decides to increase the percent of this, the available amount with the banks comes down and if RBI reduce the CRR then available amount with Banks increased and they are able to lend more.Present rate is (5.75% today 29.01.10) announced
Repo Rate:Repo rate is the rate at which our banks borrow rupees from RBI. This facility is for short term measure and to fill gaps between demand and supply of money in a bank .when a bank is short of funds they they borrow from bank at repo rate and if bank has a surplus fund then the deposit the funds with RBI and earn at Reverse repo rate .present rate is 4.75 as on 29.01.2010)
Reverse Repo rate is the rate which is paid by RBI to banks on Deposit of funds with RBI.A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.To borrow from RBi bank have to submit liquid bonds /Govt Bonds as collateral security ,so this facility is a short term gap filling facility and bank does not use this facility to Lend more to their customers. present rate is 3.25 as on 29.01.2010)

SLR((Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the expansion of bank credit.Generally this mandatory ration is complied by investing in Govt bonds.present rate of SLR is 25 %.(as on 29.01.2010)But Banks average is 27.5 % ,the reason behind it is that in deficit Budgeting ,Govt landing is more so they borrow money from banks by selling their bonds to banks.so banks have invested more than required percentage and use these excess bonds as collateral security ( over and above SLR )to avail short term Funds from the RBI at Repo rate.

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Amit Kumar April 17, 2012 at 6:23 am

why reporate affect market as it is only the banks proficiancy instrument?

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Manuj April 18, 2012 at 5:18 am

Can the repo rates be lesser than the Intesrest on the loans that the banks lend to customers?

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nisha April 29, 2012 at 4:17 am

whats current repo rate plz tell urgently

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Gaurav Goyal May 2, 2012 at 6:29 am

Helo Sir, Please tell me what is E kiokes ? Launching by the PNB. If possible give me full information about it. Thanks….

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jay joshi May 8, 2012 at 2:03 pm

what should be the step to control the inflation,recently RBI decrease the Repo Rate,Reverse Repo Rate, and CRR so wht is the effect for economy and wht is for bank

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Dolamani Majhi May 13, 2012 at 12:11 pm

Please sir,convey me recent Repo Rate,Reverse Repo Rate & Bank Rate.
Thank you.

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Swaraj Chhallani May 29, 2012 at 3:35 am

Sir,
Could you please explain difference between BR and BPLR?

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Stock tips intrady May 29, 2012 at 6:26 am

This is very interesting to see that an year old post is still so popular.
Congrats Sathish!
One of the reason why this topic is so important is just because students taking more interest in banking terms as they are seeing banking as a better career option.
Well, for shake of all the readers I am updating all rates here.
Bank Rate: 9.00%
CRR: 4.75%
SLR: 24%
Repo Rate: 8%
Reverse Repo Rate: 7%
Rate of interest on savings account: Deregulated by RBI
Marginal Standing Facility: 9%

Just go through it, I am sure that it will help you very much.

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Mithun June 9, 2012 at 7:37 am

I want to know the difference between Bank Rate & Repo Rate.

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namrata June 10, 2012 at 10:42 am

what is bank rate?

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tomy mathew June 25, 2012 at 4:38 am

bank rate is the rate at which the central bank lend to the commercial banks

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sunita July 11, 2012 at 11:13 am

sir i want to know about full details of SLR & CRR.

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Akash July 29, 2012 at 3:56 pm

Sir,

Why Repo rates are always higher than the Reverse repo rates ?
And if the situation is reversed than what will happen ?

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raji July 30, 2012 at 9:17 am

thank u so much………………………………………….

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Vikranth July 31, 2012 at 5:46 am

Hello Mr. Sathish can you tell me different types of interest rates?

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SUNIL KUMAR August 2, 2012 at 4:55 am

I want to understand the REPO RATE and REVERSE REPO RATE. Pl.guide me clearly with example.

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Satyam August 9, 2012 at 8:07 am

Why Repo and Reverse Repo is always increase?

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R E BHAKTA August 26, 2012 at 7:33 am

what is current repo rate ,reverse repo rate,bank rate,CRR and SLR?

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jyoti August 26, 2012 at 11:53 am

reverse repo rate, repo rate, bank rate are going to b e change by sensex or yearly??

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jyoti August 26, 2012 at 11:54 am

pls tell me who is going to form this rate?

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PRATIK August 29, 2012 at 3:27 pm

SIR
COULD YOU PLEASE TELL ME CURRENT REPO REVERSE REPO CRR AND SLR RATE..

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neelam kumari September 16, 2012 at 7:21 am

sir,.could u plz .tell me abt..venture capita,banking ombudsmen scheme; hedge fund ; FCCB; capitalism ; socialism ; arbitage ; and RTGS system?????
plz. sir…..it will be really helpful…………….i m preparing for bank clerk intrvw.!!!
..and also suggest me sites for preparation in my intrvw!!! thank u!!!

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ravan September 18, 2012 at 4:44 pm

well done satish…thanks a lot ….

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sujit kumar September 23, 2012 at 3:51 pm

please tell me the current

CRR / BANK RATE / REPO RATE / REVERSE REPO RATE

REGARDS

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